Walmart cuts its outlook despite 3rd-quarter profits

By ANNE D'INNOCENZIO Published: November 15, 2013
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— Walmart shoppers — much like many Americans — still feel like they're in a recession.

In the uneven economic recovery, their bills are going up, but their wages are not. While the well-heeled crowd benefits from gains in the stock market, Walmart shoppers are still struggling with a higher payroll tax. And shopping for bargains isn't a hobby, but a necessity.

For these reasons, the world's largest retailer on Thursday cut its annual outlook for the second time in three months and gave fourth-quarter guidance that's below Wall Street's expectations.

The forecast comes as rivals Nordstrom, Kohl's and Macy's reported mixed results, and shows how vulnerable Walmart — and its customers — are to economic ups and downs. Walmart shoppers, who on average make $45,000 a year, were squeezed by the recession that began at the end of 2007 and have struggled to recover since it ended in 2009.

They've been dealing with a 2 percentage point increase in the Social Security payroll tax since Jan. 1. A partial 16-day government shutdown this year also hurt business in areas with large military bases. And the Nov. 1 expiration of a temporary boost in government food stamps also could hurt customers' ability to spend.

Tougher competition

On top of that, Walmart is facing increased competition from online rivals like Amazon.com, which is opening warehouse hubs closer to cities to speed up delivery. Another threat: Dollar stores, which have convenient locations and name-brand products at discounted prices.



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